Mortgage lenders saw a pre-tax net loss of $28 on each loan they originated in the first quarter, down from a net loss of $40 per loan in the fourth quarter, according to the Mortgage Bankers Association’s (MBA) Quarterly Mortgage Bankers Performance Report.
“Production profitability was close to break-even in the first quarter of 2025 despite a decline in volume and an increase in production expenses,” says Marina Walsh, CMB, Vice President of Industry Analysis for the MBA, in a statement. “Production revenues increased at about the same pace as costs, which mitigated losses.”
Lenders with lower production volume continued to struggle the most, according to the report. For example, lenders with less than $100 million in dollar volume posted average losses of over $1,000 per loan. In addition, lenders with low average loan balances – less than $250,000 – recorded average production losses of over $1,300 per loan.
“Accounting for both production and servicing operations combined, 58 percent of mortgage companies in MBA’s sample are profitable, but that leaves 42 percent who are still not yet out of the woods,” Walsh says.
The average pre-tax production loss was 7 basis points (bps) in the first quarter, compared to a loss of 4 bps in the fourth quarter. The average quarterly pre-tax production profit, from the first quarter of 2008 to the most recent quarter, is 40 basis points.
Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to 381 basis points in the first quarter of 2025 from 344 basis points in the fourth quarter.
Per-loan costs increased to $12,579 per loan in the first quarter, up from $11,230 per loan in the fourth quarter of 2024.
From the first quarter of 2008 to last quarter, loan production expenses have averaged $7,702 per loan.
Servicing net financial income for the first quarter (without annualizing) was $22 per loan, down from $142 per loan in the fourth quarter.
Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses, and gains/losses on the bulk sale of MSRs, was $90 per loan in the first quarter, up from $84 per loan in the fourth quarter.
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